Kathryn Keneally, the assistant U.S. attorney general for the Tax Division, recently stated that U.S. tax authorities, specifically the IRS and the Department of Justice, have little patience for taxpayers still unwilling to disclose foreign accounts. While participating in a roundtable discussion at the annual tax institute at the University of Southern California, Keneally indicated that taxpayers who wait to disclose their foreign accounts to the IRS are playing an extremely dangerous game.

Under the Foreign Account Tax Compliance Act (FATCA), U.S. taxpayers with offshore financial assets that exceed certain thresholds are required to disclose these assets to the IRS. “FATCA also requires foreign financial institutions to report financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest, to the IRS,” said Los Angeles Income Tax Planning & Asset Protection Plan Attorney Bruce Givner.

Recently the U.S Department of the Treasury (DOT) and the IRS issued final FATCA regulations that included such guidelines on excluding certain obligations from the withholding requirement and providing a timeline for foreign financial institutions to perform due diligence.